Cryptocurrencies latest news and history organized by date that contains 1000000+ news archives. Click here to read what world was saying about cryptocurrencies. A Russian court convicted two men for extortion, but did not force them to return over $900,000 in crypto since they have no legal definition as property. Other courts have taken a different view. The United States tax agency has published a request for information pertaining to privacy-centric cryptocurrencies and technologies that obfuscate crypto transactions. The IRS-CI Cyber Crimes … The IRS Investigation Division Is Requesting Information About Privacy-Centric Cryptocurrencies | Privacy Bitcoin News Read More » With bitcoin increasingly riding on Ethereum’s rails, we’re about to see greater complementarity between the top two blockchains. We construct the complete network of tail risk spillovers among major cryptocurrencies using the Least Absolute Shrinkage and Selection Operator (LASS…
Russian Courts Can’t Agree on Whether Crypto Is Property
Russian courts are making conflicting rulings on whether bitcoin and other cryptocurrencies count as property.
In one new case, Saint Petersburg’s district court has refused to force bogus law enforcement officers to return cryptocurrencies extorted from a victim on the basis that digital assets are not legitimate assets.
According to the press office Telegram channel for the Saint Petersburg courts, the district court convicted two men for extorting money from an unnamed cryptocurrency OTC trader on June 30.
Related: German Regulator Had Just 1 Person Checking Wirecard’s $3.1B Books: Report
The criminals had pretended to be officers of Russia’s law enforcement and counter-terrorism agency, the Federal Security Service (FSB) – the successor of the KGB.
Threatening to beat and torture the victim, as well as faking that they’d opened a felony case against him, Petr Piron and Eugeny Prigozhin forced the victim to pay them 5 million rubles (over $70,000) in cash and transfer 99.7035 in bitcoin and some DigiByte and BitShares tokens to their digital wallets. The bitcoin alone is worth over $900,000 at current prices.
According to the court press release, the victim has been handed back the cash that was stolen. However, the court did not rule that the cryptocurrencies should also be transferred back. The court’s website confirms the convictions, although it does not provide the text of the ruling.
The press release, however, points out that, under the Russian Civil Code, cryptocurrencies have no legal status and therefore cannot be deemed property for the purpose of a criminal case.
Related: E-Gold Claims US Officials Buried Key Report in 2008 Landmark Crypto Ruling
He pointed out that, previously, the Russian courts have recognized crypto as a form of property. Uspenskiy cited the case of Ilya Tsarkov, who filed for bankruptcy in 2017 and was forced to reveal his crypto holdings so that they can be included in his estate for bankruptcy proceedings.
There have been also criminal cases in which the courts treated crypto assets like a form of property, such as when bitcoin was extorted during blackmail or fake banknotes exchanged for crypto, Uspenskiy said.
And in another case, after a Russian court refused to recognize crypto losses claimed by ICO investors who used an online investment platform called ICOadm.in, a Moscow court of appeals backed the original ruling, but did define cryptocurrency as “other kind of property.”
The appeals court further said that, under Russian law, crypto is not defined either as property, an asset, a money surrogate or information.
That may soon change. In June, a package of draft bills was introduced in the country’s parliament, the State Duma, suggesting that cryptocurrencies should be treated as property. The bills would also, however, prohibit any operations with crypto using Russia-based infrastructure.
The initiative has been criticized by Russia’s Mininstry of Economic Development and Ministry of Justice, as well as by the crypto community advocates in the country.
- Russian Courts Can’t Agree on Whether Crypto Is Property
- Russian Courts Can’t Agree on Whether Crypto Is Property
Author: Anna Baydakova
The IRS Investigation Division Is Requesting Information About Privacy-Centric Cryptocurrencies | Privacy Bitcoin News
The United States tax agency has published a request for information pertaining to privacy-centric cryptocurrencies and technologies that obfuscate crypto transactions. The IRS-CI Cyber Crimes Unit request is also asking for information in relation to “layer two offchain protocol networks, sidechains, and the Schnorr Signature algorithm.
A recently published IRS-CI Cyber Crimes Unit request that’s available for public viewing is requesting information from “industry partners” in regards to crypto assets that leverage privacy techniques and other types of protocols that hide transaction data. The Request for Information (RFI) was published on June 30, 2020, and the RFI is dubbed “Pilot IRS Cryptocurrency Tracing.”
The IRS-CI request states:
This RFI is associated with a pilot IRS Criminal Investigation Division (CI) program. CI Cyber Crimes is requesting information about systems that will allow developers and testers to conduct investigative research of distributed ledger transactions involving privacy cryptocurrency coins.
The privacy-centric crypto tokens mentioned in the IRS-CI request include “monero (XMR), zcash (ZEC), dash (DASH), grin (GRIN), komodo (KMD), verge (XVG), and horizon (ZEN). Alongside this, the IRS wants data concerning offchain networks and sidechains like “Lightning Network (LN), Raiden Network, Celer Network, Plasma, Omisego,” and coins that have integrated the Schnorr Signature algorithm like bitcoin cash (BCH).
The United States tax agency says the entity currently has little knowledge of these protocols and is looking to build its expertise. The IRS would also like to leverage applications that allow them to investigate these privacy tools and coins.
“Acquiring applications to allow an investigation to more easily trace privacy coins and other protocols that provide anonymity to illicit actors would allow investigations to be more effective, as well as facilitate a higher level of deterrence by making it harder to conceal criminal activity. It also provides an investigative efficiency that is currently limited,” the IRS request notes.
Similarly, there are only a “few investigative resources” that allow investigators to intercept or trace transactions involving “Layer 2 network protocol transactions [and] sidechain ledgers.” Including “distributed ledgers that are adopting signature algorithms that provide privacy to illicit actors.”
The IRS notes in the request that the use of privacy coins and offchain/sidchain networks are “becoming more popular for general use.” But also the tax agency is “seeing an increase in use by illicit actors.”
What do you think about the recently published IRS-CI Cyber Crimes Unit request? Let us know in the comments section below.
Anonymity, BCH, Bitcoin, bitcoin cash, BTC, Celer Network, Crypto Tracing, Cryptocurrency, IRS, IRS-CI Cyber Crimes Unit, Lightning Network (LN), OmiseGo, Plasma, Privacy, Raiden Network, Schnorr Signatures
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Money Reimagined: Bitcoin and Ethereum Are a DeFi Double Act
Tensions between the Bitcoin and Ethereum tribes have been stirred by a trend that outsiders might see as a sign of harmony.
Throughout June, the amount of tokenized bitcoin on Ethereum, the bulk of it in WBTC, a special ERC2 token known as “wrapped bitcoin,” soared from 5,200 BTC to 11,682 BTC – now worth around $108 million – according to btconethereum.com.
As is their wont, each faction described the growth of WBTC tokens, whose value is pegged one-to-one against a locked-up reserve of actual bitcoin, as proof of their coin’s superiority over the other. The Ethereum crowd said it showed that even BTC “hodlers” believe Ethereum-based applications provide a better off-chain transaction experience than platforms built on Bitcoin, such as Lightning or Blockstream’s Liquid. Bitcoiners, by contrast, took it as confirmation that people place greater value in the oldest, most valuable crypto asset, than in Ethereum’s ether token.
Related: There Are More DAI on Compound Now Than There Are DAI in the World
Beneath the rivalry on Crypto Twitter, the bitcoin-on-Ethereum trend says more about complementarity than competition.
The data simultaneously highlight that bitcoin is the crypto universe’s reserve asset and that Ethereum’s burgeoning “DeFi” ecosystem is crypto’s go-to platform for generating credit and facilitating fluid exchange.
Though it’s too early to know who the eventual winners will be, I believe this trend captures the early beginnings of a new, decentralized global financial system. So, to describe it, an analogy for the existing one is useful: bitcoin is the dollar, and Ethereum is SWIFT, the international network that coordinates cross-border payments among banks. (Since Ethereum is trying to do much more than payments, we could also cite a number of other organizations in this analogy, such as the International Swaps and Derivatives Association (ISDA) or the Depository Trust and Clearing Corporation (DTCC).)
Related: DeFi Insurer Nexus Mutual Maxed Out by Yield-Farming Boom
So, let’s dismiss claims like those of Ethhub.io co-founder Anthony Sassano. He argued that because bitcoin token transactions on Ethereum deny miners fees they would otherwise receive on the bitcoin chain, bitcoin is becoming a “second-class citizen” to ether. You’d hardly expect people in countries where dollars are preferred to the local currency to think of the former as second class. And just as the U.S. benefits from overseas demand for dollars – via seignorage or interest-free loans – bitcoin holders benefit from its sought-after liquidity and collateral value in the Ethereum ecosystem, where it lets them extract premium interest.
Still, to declare bitcoin the winner based on its appeal as a reserve asset is to compare apples to oranges. Ether is increasingly viewed not as a payment or store-of-value currency but for what it was intended: as a commodity that fuels the decentralized computing network orchestrating its smart contracts.
That network now sustains its financial system, a decentralized microcosm of the massive traditional one. It takes tokenized versions of the underlying currencies that users most value (whether bitcoin or fiat) and provides disintermediated mechanisms for lending or borrowing them or for creating decentralized derivative or insurance contracts. What’s emerging, albeit in a form too volatile for traditional institutions, is a multifaceted, market for managing and trading in risk.
This system is being fueled by a global innovation and development pool bigger than Bitcoin’s. As of June last year, there were 1,243 full-time developers working on Ethereum compared with 319 working on Bitcoin Core, according to a report by Electric Capital. While that work is spread across multiple projects, the size of its community gives Ethereum the advantage of network effects.
Whether DeFi can shed its Wild West feel and mature sufficiently for mainstream adoption, the code and ideas generated by these engineers are laying the foundation for whatever regulated or unregulated blockchain-based finance models emerge in the future.
There are legitimate concerns about security on Ethereum. With such a complex system, and so many different programs running on it, the attack surface is large. And given the challenges the community faces in migrating to Ethereum 2.0, including a new proof-of-stake consensus mechanism and a sharding solution for scaling transactions, it’s still not assured it will ever be ready for prime time.
Indeed, the relative lack of complexity is one reason why many feel more comfortable with Bitcoin Core’s security. Bitcoin is a one-trick pony, but it does that trick – keeping track of unspent transaction outputs, or UTXOs – very well and very securely. Its proven security is a key reason why bitcoin is crypto’s reserve asset.
Base-layer security is also why some developers are building “Layer 2” smart contract protocols on Bitcoin. It’s harder to build on than Ethereum, but solutions are evolving – one from Rootstock, for example, and more recently, from RGB.
And while Ethereum fans crow about there being 12 times more wrapped bitcoin on their platform than the mere $9 million locked in the Lightning Network’s payment channels, the latter is making inroads in developing nations as a payment network for small, low-cost bitcoin transactions. Unlike WBTC, which requires a professional custodian to hold the original locked bitcoin, Lightning users need not rely on a third party to open up a channel. It’s arguably more decentralized.
At the same time, the inclusion of bitcoin in Ethereum smart contracts is inherently strengthening the DeFi system.
Decentralized exchanges (DEXs), which allow peer-to-peer crypto trading without centralized exchange (CEX) taking custody of your assets, have integrated WBTC into their markets to boost the liquidity needed to make them viable. Sure enough, DEX trading volumes leapt 70% to record highs in June. (It helped, too, that June saw a surge in “yield farming” operations, a complicated new DeFi speculative activity that’s easier to do if you maintain control of your assets while trading.)
Meanwhile, the recent move by leading DeFi platform MakerDAO to include WBTC in its accepted collateral has meant it has a bigger pool of value to generate loans against.
This expansion in DeFi’s user base and market offerings is in itself a boost to security. That’s not just because more developers means more code vulnerabilities are discovered and fixed. It’s because the combinations of investors’ short and long positions, and of insurance and derivative products, will ultimately get closer to Nassim Taleb’s ideal of an “antifragile” system.
That’s not to say there aren’t risks in DeFi. Many are worried that the frenzy around speculative activities such as “yield farming” and interconnected leverage could set off a systemic crisis. If that happens, maybe Bitcoin can offer an alternative, more stable architecture for it. Either way, ideas to improve DeFi are coming all the time – whether for better system-wide data or for a more trustworthy legal framework. Out of this hurly burly, something transformative will emerge. Whether it’s dominated by Ethereum or spread across different blockchains, the end result will show more cross-protocol synergy than the chains’ warring communities would suggest.
Bitcoin might be a reserve asset for the crypto community but its recent price trajectory, with gains and losses tracking equities, suggest the non-crypto “normies” don’t (yet) see it that way. Given the COVID-19 crisis’s extreme test of the global financial system and central banks’ massive “quantitative easing” response to it, that price performance poses a challenge to those of us who see bitcoin’s core use case as an internet era hedge against centralized monetary instability. Far from complying with that “digital gold” narrative, bitcoin has performed like any other “risk-off” asset. Meanwhile, actual gold has shaken off its own early-crisis stock market correlation to chart an upward course. While bitcoin has repeatedly failed to sustainably break through $10,000, bullion has rallied sharply to close in on $1,800, levels it hasn’t seen since September 2012. Some analysts are predicting it will breach its all-time intraday high of $1,917, hit in the aftermath of the last global financial crisis in 2011. To add insult to injury, one Forbes contributor even stole from the crypto lexicon to describe the state of play, telling his readers that gold prices are “soaring to the moon.”
Two charts below show the divergent fortunes of these two would-be safe havens. Throughout 2019, bitcoin seems far less correlated with the S&P 500 stock index than gold is. Come the collapse in March 2020, they seem to swap circumstances.
How to reconcile this? Time.
Gold has had at least three millennia to establish itself as a store of value people turn to when social systems are in stress. Bitcoin has only existed for 11 years and while plenty of investors are willing to speculate on the possibility that it might supplant or compete with gold, the idea is far from ingrained across society. When will it be more widely accepted? Perhaps when the international crisis of global leadership unleashed by COVID-19 undermines the capacity of institutions like the Federal Reserve to sustain economic and social confidence. Whatever new institutions and systems we create going forward will need to address how the internet has upended society’s centralized systems of governance. When that happens, we’ll need a decentralized, digital reserve asset as the base value layer. As I said, it will take time. Meanwhile, the developers will keep building.
TRUST ME, BOND MARKET, PLEASE. James Glynn at The Wall Street Journal had a piece this week about how the Federal Reserve is considering following Australia’s lead in using “yield caps” as a policy tool to keep long-dated interest rates down. The thinking is that if the central bank explicitly signals it will always institute bond-buying if the yield on a benchmark asset such as the 10-year Treasury note rises above some predefined ceiling, the market will be less inclined to prematurely believe the Fed is going to start tightening monetary policy. In other words, we won’t see a rerun of the 2013 “Taper Tantrum,” when the U.S. bond market, worrying that the Fed would start tapering off its bond-buying, or quantitative easing, drove down bond prices, which pushed up yields. (For bond market newbies, yields, which measure the effective annual return bondholders will earn off a bond’s fixed interest rate when adjusted for its price, move inversely to price.)
The yield cap policy would be new for the Fed, but it’s really an extension of an ongoing effort to do one thing: get the market to believe its intentions. The way monetary policy works these days, it’s meaningless unless the market behaves according to what the Fed wants. It’s not about what the central bank does per se; it’s about what it says and whether those words are incorporated into investor behavior. But the more it doubles down on this, the more the Fed creates situations in which it risks having its words held against it. And that puts it at risk of losing its most important currency: the public’s trust. Commitments to price targets are always especially risky – ask Norman Lamont, the UK Chancellor of the Exchequer, who had to abandon the pound’s currency peg in 1993 because the market didn’t believe the U.K. would back its promises. The Fed has unlimited power to buy bonds, but whether it always has the will to do so will depend on politics and other factors. Once it’s locked into a commitment, the stakes go up. For now, the markets – most importantly, foreign exchange markets – still trust the Fed. But, as the saying goes, trust is hard to earn, easy to lose.
ZIMBABWE ACCIDENTALLY LEAVES DOOR OPEN FOR CRYPTO. Here’s a recipe for creating a fertile environment for alternative payment systems: outlaw the system that everyone is currently using. When the Zimbabwean government made the nutty step of banning digital payments – used for 85% of transactions by individuals, due to severe shortage of cash – it clearly wasn’t trying to promote bitcoin. In forcing people to go to a local bank to redeem funds locked in popular payments apps such as Ecocash, its goal was to protect the embattled Zimbabwean dollar. In a statement, the Reserve Bank of Zimbabwe, said the move was “necessitated by the need to protect consumers on mobile money platforms which have been abused by unscrupulous and unpatriotic individuals and entities to create instability and inefficiencies in the economy.” The thinking is that Ecocash, which enables currency trading, is making it easier for people to dump the local currency. But here’s the thing: Ecocash, which said it suspended cash-in-cash-out functions (presumably because its banking lines will be cut) is still keeping in-app payment facilities open. And it said nothing about stopping its fairly popular service allowing people to buy cryptocurrency. Not surprisingly, since the ban “demand for bitcoin has skyrocketed,” according to African crypto news site, bitcoinke, with “sources claiming bitcoin is now selling at at 18% premium above the market rate.”
OF MONEY AND MYTHS. I’m reading Stephanie Kelton’s book, “The Deficit Myth.” In a future edition of Money Reimagined, I’ll have more to say on the most influential modern monetary theory proponent’s explanation of its ideas. But for now I’ll just say that, while I’m not likely to be a convert to all its prescriptions, it seems clear that MMT is widely misunderstood by folks on both the left and the right – also, very much by the crypto industry. The latter is perhaps because people in crypto tend to skew more to the metallist school of money, rather than to chartalism. Either way, a clearer grasp of what MMT is all about would, I believe, help improve the industry’s discussion around government, money, trust and how blockchain-based systems can integrate with the existing one.
How to Value Bitcoin: Bitcoin Days Destroyed
How to place a value on bitcoin? Its data are unfamiliar territory for many investors. Nearly half of investors in a recent survey said a lack of fundamentals keeps them from participating.
BIS Plans New Central Banking Fintech Research Hubs in Europe, North America. The Bank of International Settlements – the central bank to the world’s central banks – is getting serious about its money tech R&D centers, opening innovation hubs in Toronto, Stockholm, London, Paris and Frankfurt. A coordinated, standardized approach to developing central bank digital currencies? Danny Nelson reports.
DeFi’s ‘Agricultural Revolution’ Has Ethereum Users Turning to Decentralized Exchanges. DEX’s, often touted as a fairer and safer way to trade cryptocurrencies, might finally have their use case: yield farming. In the past, as Brady Dale reports, most people haven’t wanted to self-custody, preferring institutions to manage the risks of holding their keys for them. But in DeFi, where people undertake dual borrowing-and-lending schemes to make big, quick returns on incentives and high interest rates, is better if you control the keys during the trade. And decentralized exchanges are seizing the opportunity.
‘Money Printer Go Brrr’ Is How the Dollar Retains Reserve Status. Our columnist Francis Coppola is here to tell you that you don’t understand how quantitative easing works. The Fed is not on some self-destructive missione here. Inflation? Not going to happen. The dollar’s demise? On the contrary; the Fed’s monetary rescue mission is what will keep the greenback atop its throne.
Senate Banking Committee Remains Open to Idea of Digital Dollar in Tuesday’s Hearing. If you want a measure of how far things have come in terms of the acceptability of the digital dollar idea in Washington from something that a year or so ago would have been a nutty, fringe idea, read the opening paragraph to Nikhilesh De’s writeup of this hearing: “Not every U.S. lawmaker is on board with the idea of a central bank digital currency (CBDC) or digital dollar, but no one explicitly rejected it during a hearing of the powerful Senate Banking Committee.”
- Money Reimagined: Bitcoin and Ethereum Are a DeFi Double Act
- Money Reimagined: Bitcoin and Ethereum Are a DeFi Double Act
Author: Michael J. Casey
Investigating tail-risk dependence in the cryptocurrency markets: A LASSO quantile regression approach
We map the entire network of tail risk dependence among 21 major cryptocurrencies.
The right tail risk is more pronounced than the left tail risk.
Bitcoin and Litecoin are major drivers of tail risk when markets are bullish.
Ethereum and Ethereum Classic are major drivers of tail risk when markets are bearish.
A naïve, equal-weighted portfolio of cryptocurrencies delivers substantial diversification.
We construct the complete network of tail risk spillovers among major cryptocurrencies using the Least Absolute Shrinkage and Selection Operator (LASSO) quantile regression. We capture important features of the network, including major risk-driving and major risk-receiving currencies, and the evolution of the tail dependence among the currencies over time. Importantly, we reveal a striking finding that the right tail dependence among the cryptocurrencies is significantly stronger than the left tail counterpart. This unique characteristic may have contributed to the rise in popularity of cryptocurrencies over the last few years. Our portfolio analysis reveals that diversification in cryptocurrency investment can be accomplished simply by employing the naïve equal-weighted scheme even when transaction costs are taken into account.
© 2020 Elsevier B.V. All rights reserved.